Scott Miller has more than a passing interest in Shopify Inc.’s initial public offering.
The chief executive officer of Vision Critical Communications Inc., a marketing-software company, is eager to see how the first big IPO of a wave of Canadian technology companies goes because he’s prepping his own firm for the “public eye,” Miller said.
“We want to see it go extremely well because all it does is expand the options for companies like Vision Critical,” he said in an interview at Bloomberg’s Toronto office.
Those options include an IPO of its own, adding to its more than $40 million in private funding, or an outright sale, Miller said. “I can see over the next two to three years, all three of them having a certain degree of appeal and viability.”
Shopify is expected to begin trading this week with an IPO that aims to raise as much as $123.2 million. That would value the company at more than $1 billion. The Ottawa-based software company joins other tech firms including Stingray Digital Media Group that plan to tap public markets.
Vision Critical, whose clients include NASCAR and Banana Republic, sells software that helps companies build online communities of customers that can give feedback on new products and approaches.
With revenue of more than C$100 million in 2014, the Vancouver-based company is coming of age as companies boost spending on everything from tracking shoppers on social media to buying online adspace. Marketing departments will spend $44 billion on software by 2020, an almost four-fold increase from 2014, according to venture capital firm Foundation Capital LLC.
Vision Critical’s “insight communities” have five million members worldwide. Customers enjoy getting a glimpse of new products before they hit shelves, while companies get better insight into what their target market is looking for, founder and chief product officer Andrew Reid said in the interview.
“Consumers don’t want to be dictated to, they want to have a dialogue,” said Ashu Garg, general partner at Foundation Capital who’s invested in marketing technology companies including Boston-based Localytics and Emeryville, California-based TubeMogul Inc.
Vision Critical’s clients pay on a subscription basis, depending on how many people they want in the community. After Colombian airline Avianca merged with TACA it used a Vision Critical community to help develop its flight attendants’ uniforms, inflight magazines and even the kind of food it served, Reid said.
“The large companies in the space frankly have not figured it out,” Garg said by phone. “Whether it’s Vision Critical or TubeMogul or Localytics that can scale, I am a big believer that there is a massive opportunity.”
Vision Critical is just one among dozens of software-makers fighting for attention and money from marketers, Garg said.
“When there are big opportunities there are lots of people that see the big opportunities,” he said. “It’s a competitive space.”
Reid started Vision Critical in 2000 with his father Angus Reid, one of Canada’s best-known social researchers. The first project was an online focus group for female runners, he said. Miller was hired in 2012 after 12 years at market research firm Synovate Ltd.
Miller won’t rule out pulling the trigger on an IPO if the company sees the right opportunity. With the end of a decade-long commodity bull market and a drop in oil prices, Canadian investors are eager for technology offerings in a country where the industry accounts for less than 3 percent of the benchmark equity index.
For now, the focus is on growing revenue and setting up the business so income and expenses are more predictable, he said. The company has increased revenue to more than C$100 million from C$5 million in 2006, Reid said. Recurring revenue from subscriptions is growing 30 percent a year, Miller said.
“We can’t not get kind of excited by the ‘hey, Shopify’s going, when are you guys thinking about it?’,” he said. “At the same time, we have a fiduciary responsibility to do what’s right for our shareholders.”